Archives for July 9, 2018

A popular decentralized exchange platform, Bancor, recently took to Twitter to announce that the platform fell victim to a security breach, giving further details about the apparent hack.

Bancor Sees $24 Million In Cryptos Stolen

On July 9th at 8 AM (UTC), Bancor released a Tweet noting that its web service would be closed down for maintenance. This announcement, which came out of nowhere, got some users worried, as they wondered what had occurred.

A few hours later, another Tweet was issued bringing clarity to the situation, writing:

“This morning (CEST) Bancor experienced a security breach. No user wallets were compromised. To complete the investigation, we have moved to maintenance and will be releasing a more detailed report shortly. We look forward to being back online as soon as possible.”

According to details released in an update, a wallet used to update smart contracts was compromised by an unnamed attacker. The hacker or group of hackers were able to withdraw 24,984 ETH, along with two ERC-20 tokens, which are NXPS and the in-house BNT.

The total amount of funds stolen amounted to $24 million, but the update stressed that no user wallets were compromised.

Acting quickly, the team at the exchange utilized code in the BNT smart contract that allowed for them to freeze the stolen tokens. The update noted:

“Once the theft was identified, we were able to freeze the stolen BNT, limiting the damage to the Bancor ecosystem from the theft.”

Adding that this function was only meant to be used in “an extreme situation,” like the one seen just recently. The exchange was unable to take control of the ETH or NXPS tokens but the update made it clear that the platform is working with “dozens of cryptocurrency exchanges” to trace the stolen funds, and possibly identify the hacker(s).

Bancor has become one of the most prominent decentralized exchange (DEX) platforms in the industry, raising $153 million in an ICO last year. The exchange has consistently posted volume figures that mirror and even surpass other premier DEX platforms, allowing for its users to participate in a decentralized trading environment.

However, this seemingly devastating hack brings Bancor’s security protocols and systems into question. Emin Gun Sirer, a professor at Cornell University and co-director of the IC3 cryptocurrency initiative, criticized the operations security (op-sec) methods which Bancor utilized in their smart contract, writing:

“This looks like a straightforward case of bad opsec at Bancor, instead of a more worrisome flaw in their core contract.”

Sirer posted another Tweet in the same thread that pointed out that there were some aspects of central control written into the smart contract.

Of course, the Bancor contract should not have been centrally controllable to this degree. And the core contract should probably have had some rate limits built into it to avoid sudden drains like this.

Although it was mostly well-received that Bancor was able to mitigate damage by using a feature on its smart contract, others reminisced back to the DAO situation with Ethereum. Although the Ethereum/Ethereum Classic situation was under vastly different conditions, users still brought up the question, “Should a decentralized platform have emergency functions written in to mitigate the risk of hack attempts?”

A Bancor wallet got hacked and that wallet has the ability to steal coins out of their own smart contracts.

An exchange is not decentralized if it can lose customer funds OR if it can freeze customer funds. Bancor can do BOTH. It’s a false sense of decentralization. https://t.co/22UYygIhEF

Charlie Lee went on Twitter to express his disbelief about the “false sense of decentralization” Bancor was pushing, as a true DEX should not be allowed to freeze user funds. The platform implied that it only had the best intentions, but the debate around this pressing topic will continue, especially as this situation unfolds further.

As of the time of press, BNT has fallen by 14% on the day, underperforming Bitcoin by 13%. But since its fall on the announcement of the hack, BNT has found a home at ~$2.65, holding at that level for the time being.

A popular decentralized exchange platform, Bancor, recently took to Twitter to announce that the platform fell victim to a security breach, giving further details about the apparent hack.

Bancor Sees $24 Million In Cryptos Stolen

On July 9th at 8 AM (UTC), Bancor released a Tweet noting that its web service would be closed down for maintenance. This announcement, which came out of nowhere, got some users worried, as they wondered what had occurred.

A few hours later, another Tweet was issued bringing clarity to the situation, writing:

“This morning (CEST) Bancor experienced a security breach. No user wallets were compromised. To complete the investigation, we have moved to maintenance and will be releasing a more detailed report shortly. We look forward to being back online as soon as possible.”

According to details released in an update, a wallet used to update smart contracts was compromised by an unnamed attacker. The hacker or group of hackers were able to withdraw 24,984 ETH, along with two ERC-20 tokens, which are NXPS and the in-house BNT.

The total amount of funds stolen amounted to $24 million, but the update stressed that no user wallets were compromised.

Acting quickly, the team at the exchange utilized code in the BNT smart contract that allowed for them to freeze the stolen tokens. The update noted:

“Once the theft was identified, we were able to freeze the stolen BNT, limiting the damage to the Bancor ecosystem from the theft.”

Adding that this function was only meant to be used in “an extreme situation,” like the one seen just recently. The exchange was unable to take control of the ETH or NXPS tokens but the update made it clear that the platform is working with “dozens of cryptocurrency exchanges” to trace the stolen funds, and possibly identify the hacker(s).

Bancor has become one of the most prominent decentralized exchange (DEX) platforms in the industry, raising $153 million in an ICO last year. The exchange has consistently posted volume figures that mirror and even surpass other premier DEX platforms, allowing for its users to participate in a decentralized trading environment.

However, this seemingly devastating hack brings Bancor’s security protocols and systems into question. Emin Gun Sirer, a professor at Cornell University and co-director of the IC3 cryptocurrency initiative, criticized the operations security (op-sec) methods which Bancor utilized in their smart contract, writing:

“This looks like a straightforward case of bad opsec at Bancor, instead of a more worrisome flaw in their core contract.”

Sirer posted another Tweet in the same thread that pointed out that there were some aspects of central control written into the smart contract.

Of course, the Bancor contract should not have been centrally controllable to this degree. And the core contract should probably have had some rate limits built into it to avoid sudden drains like this.

Although it was mostly well-received that Bancor was able to mitigate damage by using a feature on its smart contract, others reminisced back to the DAO situation with Ethereum. Although the Ethereum/Ethereum Classic situation was under vastly different conditions, users still brought up the question, “Should a decentralized platform have emergency functions written in to mitigate the risk of hack attempts?”

A Bancor wallet got hacked and that wallet has the ability to steal coins out of their own smart contracts.

An exchange is not decentralized if it can lose customer funds OR if it can freeze customer funds. Bancor can do BOTH. It’s a false sense of decentralization. https://t.co/22UYygIhEF

Charlie Lee went on Twitter to express his disbelief about the “false sense of decentralization” Bancor was pushing, as a true DEX should not be allowed to freeze user funds. The platform implied that it only had the best intentions, but the debate around this pressing topic will continue, especially as this situation unfolds further.

As of the time of press, BNT has fallen by 14% on the day, underperforming Bitcoin by 13%. But since its fall on the announcement of the hack, BNT has found a home at ~$2.65, holding at that level for the time being.

Ran into this article over the weekend. The piece was extremely well written and resembles a lot of the stuff being published today. Though in retrospect, I think the question posed in the headline has been answered with a resounding affirmative.

For more insight into Bitcoin’s price action over the last few years, here is an article I’ve published in the Global Banking & Finance Review.

And if you want to understand more about the future of cryptocurrency transactions in the real world, please also check out this article from our UK Managing Director in The Telegraph.

Please note: All data, figures & graphs are valid as of July 9th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As England advances in the World Cup, it seems the country has taken a step back on Brexit. Prime Minister Theresa May’s plan hasn’t been received as well as she would’ve liked. Her Foreign Secretary even likened the plan to a “polished turd,” but it seems he is now behind it.

Unfortunately for May, some critical players did not get behind it, namely the Brexit Secretary David Davis and two of his associates. With just 8 months until the March 2019 deadline, it’s looking like there will be difficult times ahead.

The Pound Sterling is seemingly unphased by all of this. Not only did it open the week with a notable gap up (purple circle), but it has continued to climb throughout the morning.

In fact, the British Pound has been one of the best performing currencies so far this month as the US Dollar is seeing a bit of a pullback.

It will be interesting to see the Pound’s reaction to the game on Wednesday night. So far, the games have certainly had an impact on the mood in London, which seems to be having a bigger impact on the markets than Brexit.

The blue circle on the GBPUSD chart above is the game between England and Colombia, the victory of which secured their position in the quarter-finals. The game against Sweden happened when the markets were closed for the weekend, which might explain the weekend gap mentioned above (purple circle).

US Signs of Recession

Watching the stock markets these last few months has been like watching a game of tennis, only instead of side to side, it’s been more like up and down. Ever since the big drop at the beginning of February, the Dow Jones has been rather random with cycles of about 1000 points in either direction but going nowhere fast.

Markets are moving upwards today, especially in Asia as the China50 scored 3.46% this morning.

Meanwhile in the United States, one of the oldest indicators of economic instability is inching closer to a bad omen.

As we discussed in an update from June 27th, the spread between the yields of the 2-year and the 10-year treasury bonds has been getting very narrow. At the time, it was as low as 34.24 basis points.

Today, that number has fallen below 30 basis points for the first time since 2007.

If the number goes negative, that is a clear sign that investors are more worried about what might happen in the short-term than they are about the long-term market stability.

Now for Crypto

The crypto markets have been pretty calm over the weekend with prices showing excellent signs of stability over the last few weeks. The next hurdle for bitcoin is a psychological resistance at $7000.

No doubt, if the CBOE gets approval for a bitcoin-based ETF it will be yet another way for Wall Street traders to gain liquidity on the world’s favorite digital asset.

However, the volumes on the crypto-products already offered by CBOE and CME are still quite low. Having an additional product won’t necessarily open the floodgates, but what it will do is improve the situation during the next price surge.

Let’s have an amazing week ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Tron is on another leg lower but might be due for a bounce off the nearby support zones.

Price has tumbled through most of the Fib extension levels but is still due to test the channel support and full extension.

Technical indicators are showing mixed signals, with oscillators hinting at a bounce.

Tron has been in selloff mode for the past few days but might be able to bounce off these nearby support areas.

Technical Indicators Signals

The 100 SMA is still below the longer-term 200 SMA on this time frame to indicate that the path of least resistance is to the downside. This confirms that the selloff is more likely to resume than to reverse.

Also, the gap between the two is widening to reflect strengthening bearish momentum. The 100 SMA is also near the top of the descending channel on the 1-hour time frame to add to its strength as resistance in the event of a pullback.

Tron might be due for a bounce off current levels as price is hovering at the 78.6% extension. The full extension is located at 0.034 but Tron could also find some support at the bottom of the channel around 0.035.

RSI has been lingering around oversold territory for quite some time, which reflects exhaustion among sellers. Turning higher could draw buyers in and Tron could follow in the climb. Stochastic is also sitting in the oversold region but has yet to move back up to signal a pickup in buying pressure.

TRXUSD Chart from TradingView

Cryptocurrencies are erasing part of their gains from the previous week after a few American economists, namely Joseph Stiglitz, Nouriel Roubini and Kenneth Rogoff, gave negative remarks on bitcoin.

“You cannot have a means of payment that is based on secrecy when you’re trying to create a transparent banking system. If you open up a hole like bitcoin then all the nefarious activity will go through that hole, and no government can allow that.”

Tron is on another leg lower but might be due for a bounce off the nearby support zones.

Price has tumbled through most of the Fib extension levels but is still due to test the channel support and full extension.

Technical indicators are showing mixed signals, with oscillators hinting at a bounce.

Tron has been in selloff mode for the past few days but might be able to bounce off these nearby support areas.

Technical Indicators Signals

The 100 SMA is still below the longer-term 200 SMA on this time frame to indicate that the path of least resistance is to the downside. This confirms that the selloff is more likely to resume than to reverse.

Also, the gap between the two is widening to reflect strengthening bearish momentum. The 100 SMA is also near the top of the descending channel on the 1-hour time frame to add to its strength as resistance in the event of a pullback.

Tron might be due for a bounce off current levels as price is hovering at the 78.6% extension. The full extension is located at 0.034 but Tron could also find some support at the bottom of the channel around 0.035.

RSI has been lingering around oversold territory for quite some time, which reflects exhaustion among sellers. Turning higher could draw buyers in and Tron could follow in the climb. Stochastic is also sitting in the oversold region but has yet to move back up to signal a pickup in buying pressure.

TRXUSD Chart from TradingView

Cryptocurrencies are erasing part of their gains from the previous week after a few American economists, namely Joseph Stiglitz, Nouriel Roubini and Kenneth Rogoff, gave negative remarks on bitcoin.

“You cannot have a means of payment that is based on secrecy when you’re trying to create a transparent banking system. If you open up a hole like bitcoin then all the nefarious activity will go through that hole, and no government can allow that.”

Key Points

Bitcoin cash price declined further and broke the $730 support area against the US Dollar.

There was a break below a key bullish trend line with support at $740 on the hourly chart of the BCH/USD pair (data feed from Kraken).

The pair may continue to move down towards the last swing low and support at $700.

Bitcoin cash price extended its downside correction below $740 against the US Dollar. BCH/USD is likely to extend its decline further towards the $700 support.

Bitcoin Cash Price Decline

There was a downside correction initiated from the $780 swing high in bitcoin cash price against the US Dollar. The BCH/USD pair declined below the $750 support and faced an increased selling pressure. It prompted more declines and the price declined below the $740 support area. More importantly, there was a close below the 50% Fib retracement level of the last leg from the $698 low to $780 high.

Sellers took control recently, resulting in a break below $730. There was also a break below a key bullish trend line with support at $740 on the hourly chart of the BCH/USD pair. The pair is now trading well below the $750 level and the 100 hourly simple moving average. An immediate support is around the 76.4% Fib retracement level of the last leg from the $698 low to $780 high at $717. Below this, the price is likely to extend losses towards the last swing low and support at $700.

Looking at the chart, the price is showing a few bearish signs below $750, $740 and the 100 hourly SMA. If there is an upside correction, buyers could struggle to break the $740 and $750 resistance levels in the near term.

Looking at the technical indicators:

Hourly MACD – The MACD for BCH/USD is placed heavily in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BCH/USD is now moving into the oversold levels.

Key Points

Bitcoin cash price declined further and broke the $730 support area against the US Dollar.

There was a break below a key bullish trend line with support at $740 on the hourly chart of the BCH/USD pair (data feed from Kraken).

The pair may continue to move down towards the last swing low and support at $700.

Bitcoin cash price extended its downside correction below $740 against the US Dollar. BCH/USD is likely to extend its decline further towards the $700 support.

Bitcoin Cash Price Decline

There was a downside correction initiated from the $780 swing high in bitcoin cash price against the US Dollar. The BCH/USD pair declined below the $750 support and faced an increased selling pressure. It prompted more declines and the price declined below the $740 support area. More importantly, there was a close below the 50% Fib retracement level of the last leg from the $698 low to $780 high.

Sellers took control recently, resulting in a break below $730. There was also a break below a key bullish trend line with support at $740 on the hourly chart of the BCH/USD pair. The pair is now trading well below the $750 level and the 100 hourly simple moving average. An immediate support is around the 76.4% Fib retracement level of the last leg from the $698 low to $780 high at $717. Below this, the price is likely to extend losses towards the last swing low and support at $700.

Looking at the chart, the price is showing a few bearish signs below $750, $740 and the 100 hourly SMA. If there is an upside correction, buyers could struggle to break the $740 and $750 resistance levels in the near term.

Looking at the technical indicators:

Hourly MACD – The MACD for BCH/USD is placed heavily in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BCH/USD is now moving into the oversold levels.